UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________
No. 92-5046
__________________
MIKE D. LEE, d/b/a
MID-SOUTH INVESTMENT,
Plaintiff-Appellant,
versus
WAL-MART STORES, INC.,
Defendant-Appellee.
______________________________________________
Appeal from the United States District Court for the
Eastern District of Texas
______________________________________________
(September 23, 1994)
Before REAVLEY and GARWOOD, Circuit Judges and LAKE,* District
Judge.
GARWOOD, Circuit Judge:
This is a diversity action originally brought by plaintiff-
appellant Mike D. Lee (Lee) against defendant-appellee Wal-Mart
Stores, Inc. (Wal-Mart) for alleged damages that resulted from two
Texas construction projects in the towns of Daingerfield and Paris.
At trial, the jury found that Wal-Mart had breached its fiduciary
duty to Lee and had committed economic duress and fraud, but that
*
District Judge of the Southern District of Texas, sitting by
designation.
Lee was estopped to complain about Wal-Mart's acts. The district
court entered a take nothing judgment in Wal-Mart's favor, which
Lee appealed. We reversed and remanded the judgment concerning the
Daingerfield transaction because we determined that Lee may have
presented enough evidence to support a jury verdict for economic
duress, and it was unclear, if this were so, whether the jury's
estoppel finding precluded Lee's recovery. On remand, the district
court granted Wal-Mart's summary judgment motion, ruling that Lee
had failed to present any evidence of economic duress and in any
event he was barred from recovery by the jury's estoppel finding.
Lee now appeals the district court's grant of Wal-Mart's summary
judgment motion. We affirm.
Facts and Proceedings Below
The background facts are described in Lee v. Wal-Mart Stores,
Inc., 943 F.2d 554, 556-59 (5th Cir. 1991), corrected, reh'g
denied, 951 F.2d 54 (1992). Since 1975, Lee, an experienced real
estate developer, has purchased and developed land sites for
shopping centers which he has leased in part to Wal-Mart on a long-
term basis. In September 1984, Wal-Mart's real estate manager for
Texas, Bill Bothwell (Bothwell), expressed to Lee Wal-Mart's desire
to have a store in Daingerfield, Texas. Bothwell told Lee that
Wal-Mart was interested in operating a store on a site which was
part of an 11.706 acre tract of land (the property) owned by others
that was subject to an option to purchase held by two Daingerfield
residents.1 Bothwell asked Lee to get involved in the project and
1
Lee testified at trial that Wal-Mart initially "anticipated
that their building would take up 6.38 acres of the total 11 acre
2
he subsequently entered into a partnership with the two individuals
holding the option. On December 17, 1984, the partnership
purchased the property.
In January 1985, Lee sent to Wal-Mart his proposed terms for
the Daingerfield project. On March 14, 1985, Bothwell sent Lee a
letter stating in full:
"Re: Daingerfield, Texas
Dear Mike:
This is to confirm our telephone conversation
concerning the subject town that Thomas P. Seay, Sr. Vice
President, Real Estate and Construction has agreed to
enter into a lease with you on your stie [sic] in
Daingerfield for a 1987 opening.
I will prepare a lease, similar to Marshall with the
following leasic [sic] items:
1. Size 50,966 square foot.
2. Term 20 years plus 6 - 5's.
3. Rent $3.60 per square foot.
4. C.A.M. 15¢ square foot max.
5. % Rent 1/2 of 1% of sales after
7th year sales.
As soon as I get other immediate things taken care
of such as Marshall and Sherman, I'll address my
attention to Daingerfield."
On March 19, 1985, Lee received standard form leases for the
Daingerfield store and two other stores. Lee was told by Bothwell
to hold the Daingerfield lease because the final site plans had not
been approved.
In November 1985, Wal-Mart's new real estate manager for
Texas, Mike Nelson (Nelson), informed Lee that Wal-Mart had never
approved a lease for the Daingerfield store. On February 3, 1986,
tract." Lee explained that he anticipated constructing a
shopping center on the other five acres.
3
Nelson sent Lee a new commitment letter for a smaller store at a
lower base rental per square foot, which Lee agreed to. In July,
Lee received a lease from Nelson which specified an even smaller
store at a lower rental rate than stated in the February 3 letter.
On August 1, 1986, Lee signed the lease. The lease specified that
Lee was to begin construction of the store on September 1, 1986,
but he was unable to do so because he could not secure financing
for the project. On September 5, 1986, after his partners refused
to contribute their share of capital for the construction project,
Lee bought them out and became the sole owner of the property.
Near the end of 1986, Lee advised Wal-Mart that he was having
difficulty obtaining financing for the construction work, and on
January 15, 1987, he proposed to sell the property to Wal-Mart. In
response, Wal-Mart sent a letter cancelling the lease because of
Lee's failure to commence construction by September 1, 1986. This
letter included a lease termination agreement, which Lee signed.
Subsequently, Lee brought suit against Wal-Mart concerning the
Daingerfield transaction and another transaction in Paris, Texas.
The trial commenced on April 30, 1990. Lee testified that he
signed the lease containing the reduced terms because he had
purchased the property over a year prior to the lease, and the bank
notes on it were coming due. When Lee was asked by his attorney
why he did not sue Wal-Mart, he responded that he "was not a one-
time developer with Wal-Mart," and he was hoping "that Wal-Mart
would come back and . . . make it right." Lee also testified that
4
he still owned the property.2
The jury found that as to the Daingerfield transaction, Wal-
Mart had breached its fiduciary duty to Lee and had committed fraud
and economic duress. However, the jury also found that Lee was
estopped to complain about Wal-Mart's acts. The district court
entered a take nothing judgment in Wal-Mart's favor, which Lee
appealed. On appeal, this Court ruled that Wal-Mart did not owe a
fiduciary duty to Lee. Lee, 943 F.2d at 557. We also concluded
that Lee could not recover under any theory concerning the Paris
transaction. Id. at 559. As to the Daingerfield transaction, we
determined that the lack of a fiduciary duty precluded a finding of
fraud, but the evidence presented at trial might still support a
finding of economic duress. Id. at 560. Therefore, we reversed
and remanded the judgment concerning the Daingerfield transaction
because that part of the jury's verdict relating to economic duress
may have afforded Lee a basis for recovery. Id. On remand, the
district court granted Wal-Mart's summary judgment motion, ruling
that Lee had failed to present any evidence on the elements of
economic duress and in any event he was barred from recovery by the
jury's estoppel finding. Lee now appeals the district court's
grant of Wal-Mart's summary judgment motion. We affirm.
Discussion
Summary judgment is appropriate if the record discloses "that
2
Lee testified that he paid approximately $380,000 for the
property. He also introduced into evidence an exhibit showing
that he was current on his interest payments to the banks which
held the notes on the property, and that he had paid all the
taxes assessed against it.
5
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law." FED.
R. CIV. P. 56(c). This Court reviews the district court's grant of
a summary judgment motion de novo. Walker v. Sears, Roebuck & Co.,
853 F.2d 355, 358 (5th Cir. 1988). Summary judgment may be granted
unless the nonmoving party on whom the burden of proof at trial
rests shows that there exist "genuine factual issues that properly
can be resolved only by a finder of fact because they may
reasonably be resolved in favor of either party." Anderson v.
Liberty Lobby, Inc., 106 S.Ct. 2505, 2511 (1986). See also Celotex
Corp. v. Catrett, 106 S.Ct. 2548, 2552-53 (1986). On this second
appeal, we first need to determine if Lee has placed in dispute any
facts which could support a finding of economic duress, an issue on
which he bears the burden of proof. Since we find he has not, we
will not address the secondary issue of whether Lee is estopped
from asserting economic duress.
This case was originally remanded partly because of this
Court's uncertainty concerning whether Lee had satisfied all of the
elements of economic duress. Lee, 943 F.2d at 560. This Court has
held that under Texas law the tort of economic duress exists only
if the following factors are shown: "'(1) there is a threat to do
something which a party threatening has no legal right to do; (2)
there is some illegal exaction or some fraud or deception; and (3)
the restraint is imminent and such as to destroy free agency
without present means of protection.'" Beijing Metal & Minerals v.
American Business Ctr., 993 F.2d 1178, 1184-85 (5th Cir. 1993)
(quoting Deer Creek Ltd. v. North Am. Mortgage Co., 792 S.W.2d 198,
6
203 (Tex. App.SQDallas 1990, no writ)); see also Brown v. Cain
Chemical, Inc., 837 S.W.2d 239, 244 (Tex. App.SQ Houston [1st
Dist.] 1992, writ denied); Tower Contracting Co. v. Burden Bros.,
Inc., 482 S.W.2d 330, 335 (Tex. Civ. App.SQDallas 1972, writ ref'd
n.r.e.). Furthermore, "the opposing party must be responsible for
the financial distress." Beijing Metal at 1185; see also Brown,
837 S.W.2d at 244 (citing First Texas Sav. Ass'n of Dallas v.
Dicker Center, 631 S.W.2d 179, 186 (Tex. App.SQ Tyler 1982, no
writ)).3
Lee argues that when Wal-Mart sent the March 14 commitment
letter, it had entered into an enforceable agreement to execute a
lease, and therefore its reneging on these proposed lease terms and
eventually cancelling the lease altogether were actions that it had
no legal right to take. Lee also contends that the economic
3
Lee contends that the first elementSQthreatening to do that
which a party does not have the legal right to doSQhas been
modified by State Nat'l Bank v. Farah Mfg. Co., 678 S.W.2d 661,
(Tex. App.SQEl Paso 1984, writ dism. by agr.). That case could
be read as broadening the first element to include not just
threatening to do that which a party did not have a legal right
to do, but also threatening to do that which is wrongful or in
bad faith. Id. at 685. However, in that case the parties owed
each other a statutory duty of good faith. Id. at 681. Such is
not the case here (moreover, our prior opinion held there was no
fiduciary duty). Furthermore, "We are bound by this Court's
prior decisions on what is the law of a state in a diversity
case, just as we are bound by prior decisions of this Court on
what is federal law." Newell v. Harold Shaffer Leasing Co., 489
F.2d 103, 107 (5th Cir. 1974). Here, Beijing Metals defines the
Texas tort of economic duress. We note that even though the
decision does not consider Farah, this circumstance does not
change the conclusion that we are bound by our prior decision.
See Broussard v. Southern Pac. Transp. Co., 665 F.2d 1387 (5th
Cir. 1982) (en banc) (holding that "the failure of a prior panel
to consider an apparent change in state law of which it was aware
. . . does not open the door for a subsequent panel to reconsider
the prior panel's decision").
7
coercion behind this threat was the fact that the bank notes that
had financed the purchase of the property were coming due, so that
he had no choice but to sign the less favorable lease. The
district court concluded that Wal-Mart had a right to negotiate a
lease that would be unfavorable to Lee, thereby finding by
inference that the March 14 letter was not a binding agreement to
execute a lease. Wal-Mart argues that the March 14 letter is not
an enforceable contract for a lease because it does not provide,
among other things, a specific description of the property which is
required under the statute of frauds. We agree.
As Lee recognizes, a contract for a lease of real property for
more than a year must comply with the statute of frauds. Tex. Bus.
& Com. Code § 26.01(b)(4) & (5); Tex. Prop. Code § 5.021; Duke v.
Joseph, 213 S.W.2d 535 (Tex. Civ. App.SQAustin, 1948, writ ref'd);
"Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934
(Tex. 1972); Kmiec v. Reagan, 556 S.W.2d 567, 569 (Tex. 1977).
"Insofar as the description of the property to be conveyed is
concerned, the writing must furnish within itself the means or data
by which that particular land may be identified with reasonable
certainty." Kmiec at 569. Lee argues that the March 14 letter
identifies the property with reasonable certainty because he owned
only one piece of property in Daingerfield. Certainly, "When the
grantor is stated to be the owner of the property to be conveyed
and it is proved that the grantor owns only a single tract
answering the description, the land is identified with reasonable
certainty." Id.; see also Ellett v. McMahan, 187 S.W.2d 253, 254
(Tex. Civ. App.SQTexarkana 1945, no writ) (holding description to
8
be sufficient where contract related to the only tract of land
owned by vendor). However, in this case, Lee was not leasing his
entire eleven-acre tract to Wal-Mart. The letter stated that the
Wal-Mart store would occupy only 50,966 square feet, and Lee
himself testified that the Wal-Mart "building would take up 6.38
acres of the total 11 acre tract." A conveyance of real property
is not identified with reasonable certainty if it merely describes
the land conveyed as an unlocated partial portion out of a larger
tract. See, e.g., Matney v. Odom, 210 S.W.2d 980, 982 (Tex. 1948)
(holding that the language in a lease that states "Landlord . . .
does hereby lease, to tenant, four (4) acres out of the East end of
a ten-acre block" did not satisfy the statute of frauds because it
failed to describe the property with reasonable certainty); Ball v.
Parks, 313 S.W.2d 134, 140 (Tex. Civ. App.SQFort Worth 1958, writ
ref'd n.r.e.) (holding that "Block 78 Hill County School Land" did
not meet test of statue of frauds with reference to contract to
convey portion of acreage thereof); MacLane v. Smith, 198 S.W.2d
493 (Tex. Civ. App. SQFort Worth 1946, writ ref'd n.r.e.) (holding
that the description "1st Tract: 58 acres more or less out of the
G. Moseley Survey, Abstract No. 1338" was insufficient to satisfy
the statute of frauds). Here, the March 14 letter failed to
satisfy the statute of frauds because it did not describe with
reasonable certainty the location of the Wal-Mart site within the
property owned by Lee.4
4
Lee also contends that the March 14 letter created a
contract for a lease because Wal-Mart is estopped from asserting
the statute of frauds as a defense. Lee relies on "Moore"
Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934 (Tex.
9
Since Wal-Mart had not entered into an enforceable contract
for a lease, Wal-Mart was "free to pursue its own interests in
negotiating leases, even if the negotiations result is a perceived
bad deal for the other party." Lee, 943 F.2d at 558 (citing by
analogy Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp.,
823 S.W.2d 591 (Tex. 1991)).5 Therefore, it could not have
illegally extracted from Lee his acceptance of the lease or his
later cancellation of that lease. Since Wal-Mart never entered
into a lease or enforceable contract to lease with Lee, and it owed
1972), which held that a written contract to enter into a lease
which complied with the statute of frauds was enforceable, even
though one of the parties had not signed the contract, and had
merely made an oral promise to sign it. Id. at 938. Although
the promise to sign the agreement did not comply with the statute
of frauds, the court held that the doctrine of promissory
estoppel prevented the defendants from asserting the statute of
frauds as a defense. Id. However, the Texas Supreme Court has
limited the promissory estoppel exception to cases where the
promise was "'to sign a written agreement which itself complies
with the Statute of Frauds.'" Nagle v. Nagle, 633 S.W.2d 796,
800 (Tex. 1982) (quoting "Moore" Burger, 492 S.W.2d at 940; see
also Southmark Corp. v. Life Investors, Inc., 851 F.2d 763, 769
(5th Cir. 1988) (holding that "[i]n "Moore" Burger the
determinative promise was a promise to sign a written agreement
that had already been prepared and that did in fact comply with
the statute of frauds"). Here, since the written agreementSQthe
March 14 letterSQdoes not comply with the statute of frauds, the
"Moore" Burger exception is inapplicable.
5
Lee argues that Wal-Mart owed him a duty of good faith and
that this duty precluded it from threatening Lee into signing the
inferior lease. Lee apparently bases this duty to act in good
faith on the past business conduct of the two parties. However,
"Texas recognizes a duty of good faith and fair dealing where a
special relationship exists and is governed or created by a
contract." State Farm Mut. Auto. Ins. Co. v. Zubiate, 808 S.W.2d
590, 597 (Tex. App.SQEl Paso 1991, writ denied) (italics added).
Lee has wholly failed to show how past business dealings
constitute such a "special relationship" outside the existence of
a fiduciary duty. Cf., Consolidated Gas & Equip. Co. v.
Thompson, 405 S.W.2d 333, 336 (Tex. 1966) ("The fact that people
have had prior dealings with each other . . . does not establish
a confidential relationship.").
10
no particular duty to Lee, Wal-Mart could not have committed the
tort of economic duress by "[t]hreatening to do that which [it] has
a legal right to do." Sanders v. Republic Nat'l Bank, 389 S.W.2d
551, 554 (Tex. Civ. App. SQTyler 1965, no writ). Lee has failed to
place any facts in dispute on this issue. On this basis alone the
district court's judgment must be affirmed.
Moreover, even assuming that Wal-Mart somehow did not have a
legal right to pressure Lee into signing the inferior lease, Lee
has also fatally failed to show that there existed an imminent
restraint such as to destroy free agency without present means of
protection. Beijing Metals at 1185. Lee argues that the loans
used to purchase the property were coming due, so that he had no
alternative but to sign the inferior lease. Lee did testify that
he had no alternative, but such a conclusion is insufficient
without supporting evidence. See Bridgen v. Scott, 456 F.Supp.
1048, 1063 (S.D. Tex. 1978) (holding that "[v]ague, self-serving
speculative testimony concerning what a party would have done under
different circumstances is generally not admissible").
It is axiomatic that economic coercion exists only if the
target of such coercion has no alternative but to submit to it.
See Tower Contracting, 482 S.W.2d at 336 (holding that because the
plaintiff had several days notice of the defendant's allegedly
illegal threat, the plaintiff had time to exercise other
alternatives). Here, Lee, a sophisticated and successful
businessman, has produced no evidence that he had no other options
besides entering into the less favorable lease. He could have sued
Wal-Mart, and pursued his legal remedies in the courts. His excuse
11
for not filing suit was that Wal-Mart would "make good" later and
he did not want to jeopardize his long-term relationship with the
company.6 In other words, Lee thought it would be profitable to
allow Wal-Mart to receive a favorable deal now because he expected
to receive a favorable deal in the future. Far from showing
economic duress with no escape, this evidence tends to show that
Lee was a willing participant who was hoping for future favorable
treatment. See Irby v. Andrews, 211 S.W. 290, 292 (Tex. Civ.
App.SQDallas 1919, no writ) (holding that evidence sustained
finding that judgment creditor was not induced by duress to satisfy
judgment, where the creditor exercised her judgment in the matter).
Furthermore, there is no evidence that he could not have walked
away from the unfavorable lease. Although the bank notes were
coming due, there is no evidence that he lacked the financial
resources to hold onto the property. Nor is there any evidence
that the banks refused any request of his to refinance or extend
the loan on the land. Perhaps his partners did not have the
6
Lee did not assert that he failed to pursue his legal
remedies because of financial difficulties. This Court has held
that such an unexplained failure, absent evidence of real
financial constraints, establishes that the plaintiff has not
made a showing sufficient to sustain a finding that he was under
imminent restraint such as to destroy his free agency. In
Beijing Metals, we held that "[a]side from a general reference to
'cash flow problems,' and a reference to the difficulty and
expense of cover, there [was] no evidence in the summary judgment
record to indicate that [the plaintiff] could not pursue its
legal remedies. The above conclusory statements are insufficient
to establish a material fact issue." Id. at 1185; see also
Hartsville Oil Mill v. United States, 46 S.Ct. 389, 391 (1926)
(holding that the plaintiff had failed to prove its duress claim
based on a breach of contract because, in part, it had presented
no evidence "that the legal damages for such breach of contract
would not have been adequate to compensate for its loss").
12
financial wherewithal to construct the shopping center, but Lee had
bought them out, and he presented no evidence concerning his own
financial condition. At trial, some five and a half years after
the purchase of the property, Lee still possessed the property and
was making payments on the notes. Lee has not presented evidence
which would sustain a finding that he was subject to a restraint
which was imminent and such as to destroy free agency without
present means of protection.
Since Lee failed to present any evidence that Wal-Mart had
illegally threatened him, and in any event has failed to show that
he was under an imminent restraint and had no protection against
it, the district court did not err in granting summary judgment in
favor of Wal-Mart.
Conclusion
For the foregoing reasons, the district court's judgment is
AFFIRMED.
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